Identification is the most important step in the Process of Risk Management. You can’t manage what hasn’t been identified.

But, once you have identified exposures to financial loss, and before any insurance decisions are made, you must analyze the exposures; qualitatively and quantitatively.

Classes of Risk

  1. Economic – risks arising from operations, marketplace, financial marketplace or entrepreneurial activities
  2. Legal – risks inherent in compliance or arising from statutory liability
  3. Political – risks arising from changes in the law or government reinterpretations or changes in governmental policy
  4. Social – risks arising from public relations, loss of reputation, cultural problems or social direction
  5. Physical – risks arising from property, people or information
  6. Juridical – risks arising from jury decisions, a judge’s decision or from court or jury attitudes

Tools used to determine and identify exposures:

  • Checklists/Surveys,
  • Flowcharts,
  • Insurance Policy Analysis,
  • Physical Inspections,
  • Net Income/Financial Analysis,
  • Compliance Review,
  • Contract Identification and Analysis,
  • Policy and Procedures Review,
  • Loss History Review, and
  • Experts